Budget deficit widens 3-fold on infra spending

The government incurred a budget deficit of P353.4 billion in 2016, widening by almost three-fold or 190 percent, from the P121.7 billion shortfall recorded in 2015 amid the Duterte administrations efforts to ramp up public spending on infrastructure, the Bureau of the Treasury reported yesterday.

“The outturns reflect strong expenditure growth of 14 percent resulting from the initiatives of the new administration to ramp up public spending for the second semester, outpacing the four percent increase in revenue collections,” the BTr said.

Despite the sharp increase, the latest figure was nine percent lower than

the revised budget deficit target of P388.9 billion.

In proportion to the economy, the BTr said the deficit was at 2.4 percent of the country’s GDP, the highest level posted in five years.

This is below the 2.7 percent cap set by the government, but higher than the 0.9 deficit to GDP ratio posted in the previous year.

Alvin Ang, economist at Ateneo de Manila University, told The STAR the increase was mainly driven by infrastructure and election spending.

BTr data showed the national government collected more revenue in 2016, rising four percent to P2.195 trillion from P2.109 trillion in 2015.

In relation to the economy, total revenue collections reached 15.2 percent of GDP, just 0.3 percent short of the 15.5 percent revised target and 0.5 percent below the 15.8 percent ratio in 2015.

The bulk of the collections came from tax sources, which rose 9.1 percent in 2016, outpacing the growth of the economy.

The BTr said this reflected the improved efficiency of the country’s tax collecting agencies, with tax effort improving to 13.7 percent from 13.6 percent in 2015.

On the other hand, the government’s non-tax collections slumped 27 percent to P215.5 billion during the period.

Disbursements, for its part, increased 14 percent to P2.549 trillion in 2016 from P2.23 trillion in 2015. But it was below revised target of P2.645 trillion set for 2016.